MELBOURNE-- QBE Insurance Group Ltd. is considering selling its
underwriting business in the U.S. in an effort to return its North
American division to profit after being hit by hefty claims in
recent years.
The company, Australia's largest insurer by market value, said
Monday it was considering, among other measures, refining the
business strategy of its U.S. "middle-market" operation and selling
all or part the business, which operates through a number of
independent insurance agencies across the country.
"We continue to assess options for various components of the
U.S. business," said John Neal, the Sydney-based company's chief
executive. "The time is right to consider our longer term plans to
maximize shareholder value."
The middle-market business under review represents around US$900
million in gross written premium for QBE, mainly property- and
casualty-insurance business, the company said.
Central to the business is Winterthur, a company acquired by QBE
in 2007 for US$1.16 billion to beef up its operations in the U.S.
At that time, Wisconsin-based Winterthur had roughly US$1.45
billion in gross premium income.
News of the review weighed on QBE's shares, sending the stock
down as much as 4%. Michael McCarthy, chief market strategist at
CMC Markets, said the worry was that a sale could lead to further
write-downs for QBE given the amount it had paid for
Winterthur.
QBE posted a net loss of US$254 million for the latest financial
year after its North American business was dented by US$1.33
billion in write-downs, restructuring costs and an increase in
claims for previous years. In recent years, the U.S. business has
struggled with crop-claims due to drought, the aftermath of
superstorm Sandy and a jump in accident claims for past years.
The company a year ago appointed David Duclos to succeed John
Rumpler as head of the North American division. Mr. Duclos put in
place a new senior executive team.
The Insurance Insider, a publication based in London, on its
website reported that QBE has begun interviewing advisers to handle
the possible sale of its Winterthur unit.
A spokesman for QBE declined to comment on the report.
David Ellis, an analyst at Morningstar in Sydney, said he didn't
expect a sale of any of the U.S. businesses to be agreed on before
QBE had completed its review.
Write to Robb M. Stewart at robb.stewart@wsj.com
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